NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
Ms. Kavita Menon, a resident individual, has a long-term capital gain of Rs 3,25,000 on listed equity shares (STT paid) sold in the year, with no other capital gains. Assuming the Rs 1,25,000 exemption limit and a 12.5% rate, what is her tax before cess and surcharge?
The tax is Rs 25,000. Long-term gains on listed equity are exempt up to Rs 1,25,000, leaving Rs 2,00,000 taxable at 12.5%, which equals Rs 25,000 before cess. Applying 12.5% to the full gain would wrongly give Rs 40,625.
- ARs 25,000Correct
- BRs 40,625
- CRs 15,625
- DRs 20,000
Explanation
Taxable LTCG = 3,25,000 - 1,25,000 = 2,00,000. Tax at 12.5% = Rs 25,000. Taxing the whole gain gives Rs 40,625, which wrongly ignores the exemption.
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